North Sea Brent crude oil futures jumped back above $100 on Monday on worries unrest in Egypt could spread to other parts of the Middle East and north Africa, disrupting energy supplies.
A senior Kuwait official said over the weekend oil prices could exceed $110 per barrel if the turmoil in Egypt continued, while Venezuela said prices could more than double to $200 if the Suez Canal closed.
Iran, which holds the rotating presidency of the Organization of the Petroleum Exporting Countries, said it saw no need for an emergency OPEC meeting even if oil prices hit $120.
"There is a lot of uncertainty over Egypt. We do not know what is going to happen there and the worry is that contagion will spread, destabilising other countries," said Christophe Barret, oil analyst at French bank Credit Agricole.
"Of course everyone is worried — the Middle East is such a big source of energy."
ICE Brent crude oil futures for March were up 80 cents at $100.63 by 0912 GMT. On Feb. 3, the Brent contract hit an intra-day high of $103.37, its highest since September 2008.
U.S. crude futures were more restrained as investors looked past the political crisis in Egypt and took note of high oil inventories, particularly in the U.S. Midwest and Cushing, Oklahoma, the delivery point for the New York Mercantile Exchange's crude futures contracts.
U.S. crude for March was up 2 cents at $89.05 a barrel by 0912 GMT.
SUEZ
Oil futures slipped nearly 2 percent on Friday as an unfounded report from Egypt set off speculation that President Hosni Mubarak could step down shortly.
Opposition groups including the banned Muslim Brotherhood held talks with the government on Sunday to resolve Egypt's political crisis, but said their core demand for the removal of the president was not met.
Demonstrators in central Cairo's Tahrir Square, focal point of an uprising that has rocked the Arab world and alarmed Western powers, said they would intensify their 12-day battle to oust the president who has vowed to stay on until September.
What really worries traders is that unrest in Tunisia and Egypt could fuel similar protests in bigger oil producers such as Libya — or even Saudi Arabia, creating massive uncertainty over oil supplies.
"OPEC (Organization of the Petroleum Exporting Countries) is more than happy to see those levels (above $95 a barrel), and jobs data in the U.S. is also positive, but in my opinion, $90 a barrel is going to hurt the economy's recovery," said Benson Wang of Commodity Broking Services in Sydney, who added the unrest in Egypt would be resolved.
"But crude supplies are still heavy," said Wang, pointing out that fundamentals are not strong enough to sustain the high crude prices.
Domestic U.S. crude stocks rose 2.59 million barrels to 343.16 million barrels in the week to Jan. 28, data from EIA showed.
Egypt controls the Suez Canal and the Suez-Mediterranean (SUMED) oil pipeline, which together moved over 2 million bpd of crude and oil products in 2009.
More than 34,000 vessels passed through the canal in 2009, of which nearly 2,700 were oil tankers carrying 29 million tonnes of oil, according to the U.S. Energy Information Administration.
Venezuela's oil minister Rafael Ramirez, who is usually hawkish on prices, said on Friday OPEC would call an emergency meeting if the canal closed.
"There is sufficient oil (in the market) and there have been no interruptions, but if they close Suez, that could take the oil price to $200," he told reporters.
OPEC members will meet consumers at an energy conference in Riyadh on Feb. 22 and are expected to talk informally about output levels.
